Compounding Disasters, Tax-Free Employee Buyouts, & Appraisal Gaps
Small Cities Weekly | 08.16.2024
As part of the work we are doing on the Small City Segment, we send out a brief weekly post of thoughts, links, and research in progress that reflect the week’s work. I’d love to hear from you if you have any thoughts, questions, disagreements, or things to add. Please forward this on to people you think might enjoy reading it.
Keeping it short this week and just sharing links from my past week!
Links
You can find links from this and all previous editions here.
How back-to-back hurricanes set off a year of compounding disasters for one city − and alarm bells about risks in a warming world, Tracy Kijewski-Correa, The Conversation
What happened in Lake Charles in 2020-21 illustrates an important truth: Compounding disasters are avoided only by reducing the recovery time after each storm.
That’s a challenging prospect with storms striking more frequently due to climate change. As the study team’s resident engineer, I believe it will require prioritizing housing resilience, creating more flexible assistance systems and building adaptive capacity that can contend with novel storm scenarios.
This op-ed was written by my grad school advisor about Lake Charles - a small city in Louisiana. Flywheel effects are often talked about in entrepreneurship when they produce positive outcomes - but flywheels can also move the other way, as she describes in compounding natural disasters.
Founders will get much richer by exiting to employees, Elle Griffin, The Elysian
These tax breaks make it easy for founders to sell to their employees—it’s a good business decision rather than an altruistic one. That’s important as nearly all employee-owned companies become that way because the founder wants to exit the company and chooses to sell it to their workers.
This is a really interesting policy question that could encourage more employee ownership across a wider range of exit scenarios.
Missing Equity Investments, CDFI Friendly South Bend
South Bend needs housing. So why do so many neighborhoods remain underdeveloped?
One problem known as the "appraisal gap" keeps developers from getting financing.
In lower-valued neighborhoods, traditional banks won’t lend enough to pay for development when appraised value after development would still be too low.
I’ve written before about the trouble in mortgage lending at the low end of the market in small cities. But a similar problem exists for new construction and remodels. In a time where a lot of people are talking about more housing and making it easier to build, this is an issue that small cities face in a unique way.
You can reach me at dustin@invanti.co if you want to chat more about the small city segment!